Rent Collection Systems for Commercial and Retail Property Managers

If you manage or lease a retail shopping centre you will know all about the pressures and problems that come with rent collection from tenants and with leases.  Given the fluctuations in retail sales and customer interest throughout the year, some of your tenants can be ‘financially pressured’ from time to time.  It’s a common problem that can and should be managed.

In any retail property you must control your rental income stream and protect it to stabilise the cash flow.  To do that watch all your tenants comprehensively, and monitor all your tenancy mix.  Have tenant meetings monthly to discuss trading and marketing issues.  Look for the problem signs with every tenant and talk them through.

Common Rental Problems and Indicators

Here are a few of the common things you may come across with distressed tenants in a shopping centre:

  • The slow or late payment of rental.
  • The lowering of stock levels in the shop
  • Poor promotional material and shop marketing.
  • Changing or lowering of staff levels in the shop.
  • The tenant talking to others in the mix about ‘perceived’ trading problems.
  • The shop opening late or not opening in extended trading hours.

So the message here is that you should watch for these problems.  Connect with all of your tenants regularly to identify rental and trading issues before they reflect in rental arrears; protect the landlord’s cash flow and income stream.

In a large Shopping Centre, the Centre Manager should be out in the mall and or moving around talking to the tenants every day.

Set Rent Collection Rules

Set some rules to monitor rental issues in your property.  Devise a system of rental control and payments.  Here are some ideas to help:

  1. Timing of Rental Invoices – Send out your rental invoices early before the upcoming month where rents are due.  In that way you will give your tenants plenty of time to make payment.
  2. Encourage all tenants to pay rents early – Make it easy for tenants to pay rent into the approved rental account ‘electronically’.
  3. Watch for Arrears on a daily basis – The first thing to do every day is to look at the arrears report printed from the property management system.
  4. Understand Lease Terms and Conditions – Every lease is potentially different.  When an arrears problem happens, refer to the lease and identify how default notices should be served.
  5. Talk to your Tenants often – When you talk to your tenants regularly you will find problems and control them from the very start.  Document and record all tenant meetings so you can go back and refer to any discussions and agreements made.
  6. Know your landlords instructions – Some landlords will have pressures on cash flow.  Rental payments and timely bank remittances will be important to the landlord.  Decide how and when you will be sending money to the landlord; stick to the plan.
  7. Respond immediately to any arrears – When a tenant creates an arrears problem for you, go straight to the lease to understand the default lease terms and conditions with that tenant.  You can then relate to the laws of rental recovery that apply to the property type.  From that point you can talk to the landlord to advise them of the next stages of moving ahead with the defaulting tenant.

You can add to this list based on property type, location, vacancy rates, and tenant circumstances.  The important point in all this is that you keep your property arrears under complete control in the retail shopping centre.

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